AMID concerns about escalating prices of resale flats, National Development Minister Mah Bow Tan yesterday assured Singaporeans that HDB flats remain affordable to most.
He said first-time households use on average less than 30 per cent of their household income to service their housing loans, which is within the yardstick the Government uses to measure affordability.
Also, eight in 10 Singaporean households qualify for the various housing grants the Government gives to home buyers, even those who buy resale flats.
He was responding to four MPs who queried the affordability of HDB flats, including Ms Jessica Tan (East Coast GRC), who was worried that young couples could not qualify for housing grants. She wanted the $8,000 income ceiling to qualify for a new HDB flat, or to be eligible for a grant to buy a resale flat, to be raised.
Mr Mah rejected the request, saying: 'There must be a limit to the number who can qualify.'
For households whose incomes just exceed the $8,000 cap, he said the Government would put up more executive condominium sites for sale next year. First-time buyers whose incomes are under $10,000 can get a $30,000 grant.
Mr Mah also pointed to two other measures that make HDB flats affordable: One is the additional housing grant given to households earning less than $5,000, to help them own their first homes.
The other is the income ceilings imposed on buyers of new two-room and three-room flats, at $2,000 and $3,000 respectively.
'This ensures that the higher-income households do not compete with lower-income households for the smaller flat types, thus enhancing their affordability,' he said.
To further allay MPs' concerns, he produced a chart showing the prices of new flats in non-mature estates and how these compare to the incomes of their buyers.
For example, those who applied for a new $150,000 three-room flat had a median household income of $2,000 and enjoyed an additional grant of $35,000.
Their monthly instalment of $460 worked out to 23per cent of their household income, within the 30per cent limit.
But even as he stressed the affordability of HDB flats, Mr Mah conceded that households have to make trade-offs between price and location.
For a household that earns $4,000 a month, the options are: a new five-room flat in Punggol or Woodlands, a resale five-room flat in Woodlands, a four-room flat in a popular estate like Tampines, or a three-room flat in a mature estate like Toa Payoh.
Mr Mah also replied to Dr Lim Wee Kiak (Sembawang GRC) who wanted the minister to rethink what he called the 'cash over valuation system' in the purchase of resale flats.
Cash over valuation is the amount that a buyer has to pay in cash, over and above the bank's valuation of the property.
In his reply, Mr Mah said cash over valuation is not unique to HDB purchases but 'part and parcel of any property transaction, whether private or public'.
About a third of HDB resale transactions are at prices at or below valuation, he noted.
Source, Straits Times, 15 Sep 2009